European Union chief Brexit negotiator Michel Barnier, right, speaks with the British Prime Minister's Europe adviser David Frost during the start of the first round of post -Brexit trade talks between the EU and the UK, at EU headquarters in Brussels, Monday, March 2, 2020. (Olivier Hoslet. Pool Photo via AP)

The pound fell against the dollar (GBPUSD=X) on Friday, after trade talks between the European Union and the UK broke up with “very little progress.”

The third round of post-Brexit trade talks between the two sides took place on Friday morning. Both sides failed to find common ground and were left disappointed when the summit broke up around lunchtime.

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Sterling sold off sharply against the dollar in the wake of downbeat comments from negotiators on both sides. By 1.30pm local time, the pound was down 0.6% against the greenback at $1.215, its lowest level since March.

Chart: Yahoo Finance

Sterling was down 0.4% against the euro at the same time, trading at €1.1264 (GBPEUR=X).

David Frost, the UK’s chief Brexit negotiator, told journalists after the meeting broke up there had been “very little progress towards agreement on the most significant outstanding issues between us.”

The sticking point appears to be what constitutes a “level playing field” between the two sides. The EU wants the UK to adhere to its standards and some regulations on goods, while the UK feels this is unreasonable.

“You cannot have the best of both worlds,” Barnier said.

Britain and the EU have until the end of the year to agree a deal on future trading or face reverting to World Trade Organisation (WTO) rules. Both sides can extend the negotiating timetable if they agree to by June but the UK government has repeatedly said it is unwilling to delay talks, despite the distraction of the COVID-19 pandemic.

“The next round must bring new dynamism in order to avoid a stalemate between us,” Barnier said. “Let us make a success of round four in the first week of June by making the tangible progress we need.”

Neil Wilson, chief market analyst at Markets.com, said there was “a lot to do to avoid the dreaded no-deal – downside risks for GBP clearly evident.”

“The pound is already beaten up pretty badly due to the wider macro outlook as a risk-on currency these days, and the Brexit risk has reared its head again to impart more pressure,” Wilson said.